The Office of Rail and Road (ORR) has called for a shake up of rail ticketing to break the effective monopoly in the automatic ticket gate (ATG) market and the complexities around ticket vending machines (TVM).
Having launched a market study in March 2018, the ORR found the ATG market is a near-monopoly where buyers of the equipment 'could be paying more than would be the case in a competitive market'.
The largest player, Cubic Transportation Systems Limited (“Cubic”), has 'an approximate share of 97% of all ATGs currently installed in GB,' its update report states.
'We understand this share has remained at this level for most, if not all of the post privatisation period.'
'Alternative suppliers are prevented from competing due to the fragmented way in which demand is brought to market and their inability to provide products that can connect to the TfL [Transport for London] network,' it said.
In terms of ticket vending, competition was 'moderate, albeit issues were raised about the unnecessary complexity of industry accreditation processes'.
'Analysis of recent procurement competitions suggests moderate levels of competition between the three incumbent players: Scheidt and Bachmann (UK) Limited (“S&B”), Worldline IT Services UK Limited (“Worldline”), and Parkeon Limited (“Parkeon”) (recently renamed Flowbird Limited).'
To combat these issue, the ORR recommends:
- The RDG [industry body the Rail Delivery Group] hosts an industry working-group to look at ways on incentivising new entrants into the market, explores options for consolidating procurement, and examines options for greater compatibility between mainline and metro systems
- TfL and industry work together to develop a solution for alternative ATG suppliers to connect to the TfL network
- The RDG continues to simplify its accreditation procedures for new and innovative retailers.
Juliet Lazarus, ORR director of competition and general counsel, said: 'Supply chains for railway products must be competitive in order to deliver innovative products and supply the value for money that passengers deserve.
'Our study has revealed weaknesses in competition which, in turn, have had a negative impact on price, quality and innovation, which have a clear impact on passengers and taxpayers.
'There is still a long way to go to rectify the issues, but we welcome the industry’s willingness to look for ways to fix these competition problems and will be working with them to bring about positive change.'
There are two types of buyers for ATGs and TVMs in Great Britain:
- Metro system operators, which use these machines on intra-urban rail networks (e.g. TfL); and
- Passenger train operating companies. These companies have been awarded franchises by the Department for Transport and use ATGs and TVMs on the mainline infrastructure on which they operate.